The US has taken over Venezuela’s oil. The problem is that the package includes a gigantic debt with China
The map of world power has been redrawn in just one week. The capture of Nicolás Maduro by US forces is not just a regime change; is the birth of the “Donroe Doctrine”, a movement with which Washington seeks to consolidate an energy empire “from Alaska to Patagonia” to control 40% of world production. However, after the military euphoria in the White House, a dilemma of trillion-dollar proportions looms: the oil has been taken, but it is mortgaged, and China demands its bills. The collector at the door. Control of the largest reserves on the planet has put the US face to face with the great creditor of the Caribbean. According to the South China Morning Post (SCMP)the current exposure in a state of “limbo” is estimated at $10 billion, although other estimates by think tanks collected by the same medium raise the historical debt to more than 60,000 million, much of it structured under the “oil for loans” model. But how was this sum arrived at? China needed energy for its industrial rise and Venezuela needed cash. Under this premise, Beijing financed railways, power plants and more than 600 bilateral agreements. Now, the great fear of the Asian giant is that the new government in Caracas —protected by the Trump administration— invoke the doctrine of “hateful debt”. As Cui Shoujun explains in SCMPthis legal remedy would allow the loans to be repudiated, alleging that China’s money did not benefit the people, but rather financed the survival of the regime. It would be the perfect “legal pretext” to clean up the balance sheets before the American oil companies take the reins. The agony of the Chinese state companies and the shield of the “Teapots”. The anxiety in Beijing is not just political, it is corporate. As revealed by Bloomberggiants such as China National Petroleum Corporation (CNPC) are carrying out damage assessments amid fears that decades of investments will evaporate. Nevertheless, according to information from Reutersthese companies still operate in the country through joint ventures such as Sinovensa, and control rights to reserves amounting to billions of barrels. However, China has an “ace up its sleeve.” A couple of months ago, they were absorbing 90% of measurable crude oil storage. Besides, as detailed by the Financial Timesmuch of the flow of Venezuelan crude oil arrived in China through the “teapots” (independent refineries), which bought the oil at steep discounts to avoid previous sanctions. By taking control of exports, the United States not only recovers crude oil, but also eliminates a key competitive advantage for the Chinese industry, raising its energy costs at a stroke. The technical paradox. Many wonder why Trump would risk so much for oil that seems “bad.” The answer is a necessary technical symbiosisAmerican and Spanish refineries (like Repsol’s) act as “stomachs” designed for heavy crude oil from Venezuela, which needs to be mixed with light oil from the fracking to produce diesel efficiently. However, the prize comes with a bill astronomical repair. The infrastructure is literally in ruins: loading an oil tanker today takes five days compared to the one day that was enough seven years ago, and the crude oil arrives “dirty” (with excess water and salt) due to lack of maintenance. Reconstructing the sector will require 10 billion dollars annually for a decade, to which is added the drama of natural gas: Venezuela today burns in “smoke” the equivalent of the consumption of all of Colombia due to pure technical negligence. The battle of the offices. Trump has taken control of the energy crown jewel, but has found himself with an astronomical repair bill and a Chinese creditor who won’t go away quietly. As the Financial Times warnsif the US decides to also suffocate supplies from Iran after this blow in Venezuela, China could see 20% of its cheap crude oil imports compromised, which would force Beijing into an unpredictable reaction. The real battle did not end with the capture of Maduro; It is just beginning in the offices of Washington and Beijing. Venezuela is the jackpot, but it is a prize that comes with fine print that could go bankrupt the financial balances of half the world. The oil era is not over, but the map of who controls it and who pays for it has been rewritten with blood and debt. Image | Luisovalles Xataka | The war in Ukraine has just met that of Venezuela: that means that its two invaders are facing each other